The beginning of the 20th century brought growth and prosperity to Buffalo. At the time, the city was one of the fastest growing cities in the nation and the Niagara Frontier was one of America’s foremost manufacturing centers.
Participating in that growth was a company founded by A.B. Schultz. Recognizing that the age of the automobile was underway, Shultz founded the Houde Engineering Corporation to manufacture shock absorbers for the automobile industry. Over the years, Houde evolved into Houdaille Industries (pronounced HOO-DYE). The company would grow along with the automobile industry and, by 1977, had over 7,000 employees, five product groups and 20 subsidiary companies.
French engineer and inventor Maurice Houdaille was a pioneer in the field of hydraulics. In 1909, he was granted a U.S. patent for improvements to a shock absorbing device for vehicles and would go on to apply hydraulic technology to the mitigation of recoil shock on French 75mm cannons during the First World War. He also applied the technology to European automobiles, developing a rotary, double-acting shock absorber that became a highly desirable “add on” for American cars.
Having received many requests to retrofit American vehicles with Houdaille’s shock absorbers, American import specialist Paul V. Clodio met with the French inventor in Paris in 1915 and acquired the rights to manufacture and sell his shock absorber in the United States. The following year, Clodio founded the Houdaille Shock Absorber Co., Inc. in New York City.
Two years later, in 1918, Buffalo automotive engineer Albert B. Shultz took over Clodio’s rights to manufacture Houdaille’s absorbers. Having left his job at the E.R. Thomas Motor Company to form the Sterling Engine Company with a group of associates in 1903, Shultz developed two-cycle gasoline engines at a small plant on Grant Street near Breckenridge Street before business dictated a move to larger facilities on Niagara Street.
Upon assuming the rights from Clodio to manufacture and sell the Houdaille-patented shock absorber, Shultz left Sterling to create the Houde Engineering Company on January 27, 1919, after a $30,000 investment. In 1927, the patents were purchased from the original French owners and Houde became the sole manufacturer and distributor of the Houdaille-designed shock absorber in the United States.
Initially setting up shop at 1400 West Avenue, the Houde Engineering Company experienced such phenomenal growth with the Houdaille shock absorber that in 1925 construction began on a larger facility at 537 East Delavan Avenue. The shock absorbers were first used as an accessory for expensive cars brands, such as Lincoln and Pierce-Arrow. But in October 1927, Henry Ford wrote to Shultz, suggesting that if Houde hired 30-year-old mechanical engineer Ralph Peo to supervise production at the Buffalo plant, then Ford would purchase Houdaille shock absorbers for all of the new Ford cars as well. Born and educated in Rochester, Peo had worked for nine years in Detroit for Packard, Dodge, General Motors and Ford so, in addition to this incentive, his deep connections to the Detroit auto industry made him a valuable asset for Houde Engineering. Thus, he was brought to Buffalo as vice president and general manager.
In the fall of 1928, Shultz and his wife went on a six-week cruise to Europe where they visited with Maurice Houdaille in France. When he returned to Buffalo, Shultz and his partners were approached by Frederick B. Cooley, president of the New York Car Wheel Company located at Niagara Street and Forest Avenue, with an offer to purchase the Houde Engineering Corporation. In October of that year, Houde was sold for $4 million, with Shultz’s share of the sale being over $1.8 million. One month later, the Michigan-based Houdaille Corporation purchased the entire outstanding Houde stock from Cooley for $6 million.
Houde Engineering Becomes Houdaille-Hershey
Detroit industrialist Claire L. Barnes created the Houdaille Corporation of Michigan in 1928 as a result of his move to purchase the Houde stock from Cooley. The following year, he merged this new corporation with two other auto-related manufactures—the Oakes Company of Indianapolis and the Hershey Manufacturing Company of Denver and Chicago—to form the Houdaille-Hershey Corporation. Shortly thereafter, Houdaille-Hershey stock was sold to the general public for $15 million.
With the merger, the Houdaille-Hershey Corporation became one of the country’s largest suppliers of automobile parts to the Detroit manufacturers. Their shock absorbers were so popular that it was quite common for automobile owners to go to a repair shop and ask for a new set of “Hoo-Dyes.” Ford even boasted in their advertisements that their new models came with four Houdaille hydraulic shock absorbers.
In the wake of Barnes’ acquisition, Ralph Peo became president of the Buffalo Division and executive vice president of Houdaille-Hershey. Under his leadership, the company began adapting the shock absorber technology for a variety of industrial uses. Models were developed to be used on American railroads, both to prevent what railroad men called the “snaking” of train cars at high speeds and also to make railroad switches close gently and without slapping when trains passed over them. They were also used on the buckets of large steam shovels so the jaws would close without slapping and crashing.
In June 1937, Claire Barnes became the chairman of Houdaille-Hershey while 54-year-old Buffalo native Charles Getler became president. Barnes would retire in 1940 at age 60 with Getler serving as both president and chairman until 1955. Following the outbreak of World War II in Europe, a newly formed subsidiary of Houdaille-Hershey, the Buffalo Arms Corporation, began construction of a large machine gun plant at Broadway and Kennedy Road in Cheektowaga for the British Government in January 1941. While continuing to manage the Delevan Avenue plant, Ralph Peo became the general manager of Buffalo Arms, operating it for the U.S. Government after they took over the plant from the British that March. The company made .30- and .50-caliber machine guns that were used on Curtiss P-40 Warhawks and Bell P-39 Airacobras, along with naval vessels and tanks.
On June 7, 1943, the Buffalo Arms plant received the Army-Navy “E” award for excellence in production, presented by Brigadier General James Kirk, chief of the small arms branch of the Ordnance Department of the Armed Forces. Kirk told the group of nearly 5,000 employees in attendance, “You are engaged in a most serious business; winning a war. . . . How fast we make our goal, depends on how well you maintain the fine production record you have established here.” After the war, the Buffalo Arms plant became inactive and was sold to Frontier Industries.
The following year, in February 1944, Houdaille contracted with the top-secret Manhattan Project to manufacture nickel plated pipes at its Garfield bumper plant in Decatur, IL. These pipes were used in the gaseous diffusion process to enrich uranium that was used to build the atomic bomb dropped on Hiroshima on August 6, 1945. The work was so top secret that most of the workers at the plant were not told the purpose of the work they were doing until after the bomb was dropped. The Garfield plant was also awarded the Army-Navy “E” award, presented at the plant by Major General Leslie R. Groves, director of the Manhattan Project.
Frustrated with Charles Getler’s limited focus on the auto industry and seeking to take advantage of the diversification opportunities available in post-war manufacturing , Ralph Peo resigned as executive vice president of Houdaille-Hershey’s Buffalo Division in early 1946 to form a new company, Frontier Industries, with a pair of partners. He would return nine years later, once many of Houdaille-Hershey’s board and executives had begun to lose faith in Getler.
Meanwhile, the operations of Houdaille-Hershey continued as usual. The automobile industry’s retooling after the war slowed production, sales and profits. But by 1951, the company’s annual sales exceeded $70 million. The Korean War had begun and Houdaille was concerned about what influence this would have on the company’s operations. Product diversification was important, so the company prepared itself to manufacture both civilian and military products. Civilian products were more profitable, while government contracts were more plentiful, but could be cut off with short notice. This was the business environment of the automobile industry in the early 1950s.
Peo Returns to Houdaille-Hershey
In February 1955, Ralph Peo returned to Houdaille-Hershey as its new president. No longer would the corporation limit its focus to the auto industry and thus be dependent on the rise and fall of Detroit’s “Big Three.” While the company would still manufacture parts for the automotive industry, it would embark on a policy of diversification, much as Peo had done with Frontier Industries. Peo moved the corporate offices of Houdaille-Hershey from Detroit to the Otis Elevator Building at 1280 Main Street in Buffalo, leasing all 8,000 square feet on the second floor, and executives were moved from Detroit to the new location. The following November, Houdaille-Hershey Corporation shareholders voted to change the name of the company to Houdaille Industries, which at the time had assets of over $40 million.
Over the next several years, Peo unleashed his policy of diversification as Houdaille Industries acquired numerous other businesses while closing down locations that had proved unprofitable or that had outlived their usefulness. In the fall of 1958, Houdaille bought controlling interest in such divers concerns as the Buffalo Eclipse Corporation (parent company of the Buffalo Bolt Company of North Tonawanda), S. M. Jones of Toledo, OH (manufacturers of oil steel sucker rods for the oil industry) and the Penberthy Manufacturing Co., of Prophetstown, IL (manufactures of jet pumps, ejectors, injectors, gages and sump pumps), among many other similar companies. While the head of Frontier Industries, Peo had also acquired the Buffalo Crushed Stone Corporation. This, along with other similarly diverse acquisitions, would become part of Houdaille Construction Materials, Inc. in the years ahead.
Some of the acquired companies were kept, while others were closed. Determining that the 500,000 square foot Buffalo Bolt plant was becoming obsolete and too costly to modernize, the plant was shut down, resulting in over 800 employee layoffs. Buffalo Bolt was once one of the nation’s foremost producers of nuts, bolts and other metal fasteners, producing 500 million pieces annually. Houdaille also closed the Eclipse Lawn Mower Company.
In July 1961, Houdaille purchased Duval Engineering and Contracting of Jacksonville, FL. Duval was the largest road, bridge, viaduct and foundation builder in northeastern Florida. Subsequently, the newly formed Houdaille-Duval-Wright Division was one of the contractors that performed the site preparation, paving and foundation work of the launch pads at Cape Canaveral. In addition, Houdaille-Span was founded in Fort Lauderdale to market the lightweight, extruded, pre-stressed and precast concrete slabs for use in constructing walls, floors and roofs, which were manufactured at Houdaille-Duval-Wright in Jacksonville. The Houdaille Construction Materials Division became an integral part of the company’s operations.
By the end of 1961, Peo had turned Houdaille into a national business leader. With subdivisions focused on the construction, automotive parts and industrial tools & machinery industries, it boasted over $80 million in annual sales, over 60 business locations in the United States and Canada and 9,783 shareholders.
Continued Expansion and a Move
On May 29, 1962, Gerald C. Saltarelli was elected president of Houdaille Industries after being employed there since 1941. Saltarelli first joined Houdaille as corporate attorney, but became corporate secretary and counsel for the company seven years later. In 1952, he became director and by 1959 he was vice president of operations. Ralph Peo continued as chairman of the board.
Changes in the automobile industry were putting pressure on Houdaille to continue to diversify. One of Saltarelli’s first projects was the expansion of facilities in Canada. Next, the S.M. Jones Division was sold in 1963. In 1964, the second Houdaille-Span concrete plant was constructed in Largo, FL. Eventually, two additional plants were built in Florida, one in Texas and another in Georgia.
In June 1965, after months of negotiations, Houdaille acquired the Burgmaster Corporation, a machine tool builder in Los Angeles. Czechoslovakian native Fred Burg, an inventor, had formed the company in 1943. The Burgmaster drill press could do the job of five ordinary drill presses. In 1957, the Burgmaster was one of the first computer-driven CNC machines. Burg valued his employees for their skills and even though they were hard working folks, Saltarelli’s eastern conservative personality did not jell with the California free living philosophy. Employees were advised to remove sideburns, mustaches and psychedelic love charms before visits to the plant by the head of the company. Saltarelli was once overheard to say that nothing but a bunch of nuts lived out there. Tensions grew between the new management and the blue collar workers and the company experienced its first strike in 1968. Saltarelli replaced the founder’s son as president of the company with a longtime Houdaille executive.
Through the end of the 1960s, Houdaille routinely purchased competing companies to overtake its corner of industry. Other times, it simply closed the competitor’s business. In 1969, Houdaille even offered $31 million for the Genesee Brewing Company of Rochester, however the deal was called off on the day before it was scheduled to close. In the early 1970s, Houdaille focused its resources on modernizing and expanding existing facilities and selling or closing unprofitable operations.
As early as 1976, Saltarelli publicly expressed his disappointment with the business environment in New York State. He said, “It is clear that the leaders of other states and communities want business, welcome it and respect it. That is not the case in New York, and human nature is such that it tends to leave where it is not welcome and go where it is wanted.” He continued saying, “Houdaille’s executive office is here at least for the present but let me hasten to say that we will not be expanding our manufacturing operations in this state as long as conditions remain the same. Political leadership finds it easier to raise taxes and protect public employment than to preserve and foster private employment. These are not reckless assertions but constructive criticisms that must be heeded by Albany; otherwise the exodus from the Empire State will continue.”
The following year, seven months after the “Blizzard of ‘77,” Saltarelli moved the Houdaille Industries headquarters from One M&T Plaza to Ft. Lauderdale, FL. At that time, it was the largest publicly-held firm based in Buffalo with over 7,000 employees, five product groups and 20 subsidiary companies.
In 1978, the company’s cash rich, debt-free balance sheet made it an attractive candidate for takeover. The Jacobs family of Buffalo, owners of the Sportservice Corporation, was one of many who took an interest in Houdaille. Jacobs began acquiring large blocks of Houdaille stock in an attempt to take over the company. Saltarelli, determined not to allow Houdaille to fall victim to a hostile raider, arranged through Goldman Sachs for Kohlberg Kravis Roberts to take the company private in a $355 million leveraged buyout, a first for a public company. This allowed the management of the company to retain their positions and to answer only to a select few investors rather than Wall Street. It did, however, create massive debt in the form of high interest junk bonds. The deal closed in May 1979 and Saltarelli retired. For 1978, the last year that Houdaille was a public company, its sales were over $400 million.
The Company in Decline After the Leveraged Buy Out
After Saltarelli’s retirement, 53-year-old Phillip A. O’Reilly became President and CEO. Houdaille made a $204 million investment in the John Crane Company of Morton Grove, IL, in 1981. Crane was the world’s largest producer of mechanical seals. At the same time, it acquired a 49 percent stake in England-based Crane Packaging.
The 1980s, however, were an ominous time for the company. The Huntington, WV, bumper plant closed in 1980 due to auto safety requirements, the introduction of plastic bumpers and fuel-economy standards that made the metal auto bumper obsolete. The following year the bumper plant in Oshawa, Ontario, also closed. Japanese competition and the deep recession of 1981-1982 also put a severe drain on the company’s profits.
Houdaille turned to Washington for help and petitioned the Reagan administration for relief from Japanese imports by asserting that the Japanese government created and maintained a cartel in the machine tool industry, to the disadvantage of the U.S. industry. With support from the U.S. Senate, President Ronald Reagan was briefed on Houdaille’s request at the White House on April 22, 1983. However, Reagan later rejected the company’s request.
By 1985, economic conditions had not improved and Houdaille announced a business restructuring program. A year later, the company was forced to undertake another leveraged buyout in order to buy out some of the investors from the initial one. Later that year, Houdaille closed its Los Angeles Burgmaster Division. With half a dozen competitors now in the machine manufacturing market and Japanese firms poaching some of Burgmaster’s technology, it no longer manufactured a unique product. The construction materials, contracting operations and Penberthy Manufacturing were also sold. Di-Arco was merged with Strippit and eventually sold. Houdaille sold the Powermatic Machine and Universal Engineering divisions to Stanwich Industries.
In 1987, Houdaille Industries moved its headquarters to the Chicago suburb of Northbrook. Phillip O’Reilly abruptly retired and Donald N. Boyce became CEO. In September 1987, Kohlberg Kravis Roberts sold what remained of Houdaille Industries to British based TI Group Plc. and the name Houdaille disappeared from the American manufacturing scene.
Epilogue - Donald N. Boyce and the Emergence of IDEX, Like a Phoenix
When the TI Group, formerly Tube Investments, Ltd, purchased Houdaille Industries, what it really wanted was Houdaille’s 49 percent interest in Crane Packaging. TI Group was the owner of 51 percent of Crane and by acquiring Houdaille it would own 100 percent.
Thus, Roberts created the IDEX (Innovation, Diversity and Excellence) Corporation to purchase the assets from the TI Group that did not fit in with that company’s business plan. In January 1988, six former Houdaille divisions were purchased by IDEX for $192 million: Strippit (metal forming machinery and tooling), Vibratech (torsional vibration dampers for diesel engines), Lubriquip (centralized lubrication systems for machinery, conveyors, etc.), Viking (rotary gear pumps), Warren Rupp (air operated diaphragm pumps) and Bandit (stainless steel banding and clamping devices).
Former Houdaille CEO Donald Boyce was chosen to be the first chairman and CEO of IDEX Corporation. Diversification had been an important part of Houdaille’s business strategy since the days of Ralph Peo, who believed it provided greater stability by increasing the number of profit sources. Boyce continued that tradition over his 12 years as head of IDEX by acquiring 14 businesses at a cost of over $640 million and expanding operations into England, Germany, the Netherlands and Australia.
Boyce retired in 2000, but today IDEX continues to be a thriving New York Stock Exchange-listed company with over 7,000 full-time employees, annual revenue of over $2 billion and net annual income in excess of $400 million.